We seal damp and protect

NOTES – GROUP
​identified in conjunction with the acquisition, net after any recognition of
impairment losses. The associated companies essentially carry out the
same operations as the Group’s other business activities and, accordingly,
the share of profit in these companies is recognized in operating profit.
The Group’s share in the post-acquisition results of an associated
company is recognized in profit and loss in the item “Share of profit or
loss in associated companies,” and is included in operating profit. Accumulated
post-acquisition changes are recognized as changes in the carrying
amount of the investment. When the Group’s share in the losses of
an associated company amount to, or exceed, the Group’s investment in
the associated company, including any unsecured receivables, the Group
does not recognize further losses unless obligations have been incurred
or payments made on behalf of the associated company. Unrealized gains
on transactions between the Group and its associated companies are
eliminated in proportion to the Group’s participation in the associated
company. Unrealized losses are also eliminated, unless the transaction
provides evidence of an impairment of the transferred asset.
Joint ventures
The Group applies IFRS 11 Joint Arrangements from January 1, 2014.
Under IFRS 11, a holding in a joint arrangement is classified as either a
joint operation or a joint venture depending on the contractual rights and
obligations each investor has. Trelleborg has assessed its joint arrangements
and determined them to be joint ventures. Joint ventures are
recognized in accordance with the equity method. The Group’s participation
in TrelleborgVibracoustic is reported as a joint venture and the participation
in profit is recognized in profit and loss in the lines “Participations in
TrelleborgVibracoustic” and “Tax attributable to TrelleborgVibracoustic”
and is included in operating profit.
The equity method entails that holdings in joint ventures are to be
initially recognized in the consolidated statement of financial position at
cost. The carrying amount is subsequently increased or decreased to
take into account the Group’s share of profit and other comprehensive
income from its joint ventures after the date of acquisition. The Group’s
share of profit is included in consolidated earnings, and the Group’s
share of other comprehensive income is included in other comprehensive
income in the Group. When the Group’s share of the losses in a joint
venture is the same amount or exceeds the holdings in this joint venture
(including all long-term receivables that in reality comprise part of the
Group’s net investment in the joint venture), the Group does not recognize
any additional losses, unless the Group has undertaken commitments or
has made payments on behalf of the joint venture.
Transactions with non-controlling interests
Transactions with non-controlling interests are treated as transactions
with the Group’s shareholders. This means that, in connection with an
acquisition from a non-controlling interest, the difference between the
purchase consideration paid and the actual share acquired of the carrying
amount of the subsidiary’s net assets is recognized in equity. Gains and
losses on divestments to non-controlling interests are also recognized in
equity.
Discontinuing or divested operations
Discontinuing or divested operations comprise significant parts of operations
and assets that the Group has determined to fully, or almost fully,
discontinue or divest through disposal or distribution. These assets are
recognized at the lower of the carrying amount and fair value, less selling
expenses. These non-current assets are not depreciated from the date of
reclassification.
Items affecting comparability
Non-recurring expenses related to the action programs aimed at enhancing
the Group’s efficiency and structure are recognized as items affecting
comparability. A project is classified as affecting comparability only
when it amounts to an equivalent of at least sek 20 m and it has been
approved by the Board. In addition to the action programs, costs and
income can, in exceptional cases, also be classified as items affecting
comparability. Exceptional items refers to material income or expense
items recognized separately due to the significance of their nature or
amount.
Translation of foreign currencies
Functional currency and reporting currency
Items included in the financial statements of the various entities of the
Group are valued in the currency used in the primary economic environment
of each company’s operations (functional currency). Swedish kronor
(SEK), which is the Parent Company’s functional currency and presentation
currency, is utilized in the consolidated financial statements.
Transactions and balance-sheet items
Transactions in foreign currency are translated into the functional currency
in accordance with the exchange rate prevailing on the transaction
date. Exchange rate gains and losses resulting from settlement of such
transactions and from the translation at the closing rate of monetary
assets and liabilities in foreign currency are recognized in profit and loss.
An exception is made when hedging transactions meet the requirements
for cash-flow hedging or net-investments hedging whereby gains and
losses are recognized directly against other comprehensive income after
adjustment for deferred taxes. Reversal to profit and loss takes place at
the same time as the hedged transaction impacts profit and loss.
Subsidiaries
The earnings and financial position of the Group subsidiaries, joint
ventures and associated companies (none of which use a high-inflation
currency) are prepared in the functional currency of each company. In the
consolidated financial statements, the earnings and financial position of
foreign subsidiaries are translated into Swedish kronor (SEK) in accordance
with the following:
Income and expenses in the income statements of subsidiaries are
translated at the average exchange rate for the applicable year, while
assets and liabilities in the balance sheets are translated at the closing
rate. Exchange rate differences arising from translation are recognized as
a separate item in other comprehensive income.
Translation differences arising on financial instruments, which are
held for hedging of net assets in foreign subsidiaries, are also entered
as a separate item in other comprehensive income. On divestment, the
accumulated translation differences attributable to the divested unit,
previously recognized in other comprehensive income, are realized in the
consolidated income statement in the same period as the gain or loss on
the divestment.
Goodwill and adjustments of fair value arising in connection with the
acquisition of foreign operations are treated as assets and liabilities of
these operations, and are translated at the closing rate.
Income tax
Income tax in the income statement includes both current tax and
deferred tax. Income tax is recognized in profit and loss except when
an underlying transaction is recognized directly against equity or comprehensive
income, in which case the related tax effect is also recognized in
equity or comprehensive income. Current tax is tax payable or recoverable
for the current year. This also includes adjustment for current tax attributable
to prior periods. Deferred tax is recognized in its entirety and calculated
using the balance sheet approach on all temporary differences
arising between the tax base of assets and liabilities and their carrying
amounts in the consolidated financial statements. Deferred tax is
measured at the nominal amount and calculated by applying the tax
rates and tax rules enacted or announced at the closing date. Temporary
differences arise in business combinations on the differences between
the consolidated value of assets and liabilities and their tax bases.
Temporary differences that arise on initial recognition of an asset or
liability, and which are not attributable to a business combination and
have not affected recognized or taxable earnings, do not entail a deferred
tax asset or tax liability in the balance sheet. Temporary differences are
not recognized for participations in subsidiaries and joint ventures/associated
companies, as the Group can control the date when these temporary
differences are reversed and when it is unlikely that they will be
reversed in the foreseeable future.
Deferred tax assets are recognized insofar as it is probable that tax
surpluses will be available in the future against which temporary differences
can be utilized.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reports presented to the chief operating decision maker. The chief
operating decision maker is the function responsible for the allocation
of resources and the assessment of the operating segments’ earnings.
For the Group, this function has been identified as the President. The
division of operating segments corresponds to the Group’s business
areas. For a description of the various segments, see pages 12-21.
The Group is divided into five business areas: Trelleborg Coated
Systems, Trelleborg Industrial Solutions, Trelleborg Offshore & Construction,
Trelleborg Sealing Solutions and Trelleborg Wheel Systems.
It also includes Group items defined as central staff functions and
two operations, the first of which is Group-wide and the second of which
is in the build-up and integration phase.
Segment reporting for the business areas comprises operating revenues
and expenses and capital employed. Capital employed encompasses
all property, plant and equipment, intangible assets and participations in
associated companies, plan assets, inventories and operating receivables,
less operating liabilities including pension liabilities.
The business areas are charged with Group-wide expenses amounting
to 0.4 percent of external sales, which does not affect recognized cash
flows.
In the presentation of the Group’s geographical markets, the operations
have been subdivided as follows: Western Europe, Rest of Europe,
North America, South and Central America, and Asia and Rest of the
World.
Net sales are recognized according to customer location, while
assets and capital expenditures are recognized according to the actual
physical location of these assets.
Other accounting and valuation policies
Non-current assets and non-current liabilities comprise amounts expected
1
Annual Report 2015 Trelleborg AB 87